In today’s briefing:
- [Japan M&A] Taiyo Holdings (4626 JP) – A Last Gasp of Likely Fruitless Optionality Remains
- [Japan M&A] Hulic Takes Out Riso Kyoiku at ¥295/Share – Small, Unsurprising, Fair Enough, One Quirk.
- Z Fin (1168 HK): A High Spread That Reflects Real Vote Risk
- Ardian & Oak Holdings / INWIT: A Towering Question
- Riso Kyoiku (4714 JP): Weak Process, but Hulic’s JPY295 Offer Will Succeed
- Hanwha Machinery & Service (0220W0 KS): Kim’s Partial Is Worth A Second Look
[Japan M&A] Taiyo Holdings (4626 JP) – A Last Gasp of Likely Fruitless Optionality Remains
- The Taiyo Holdings (4626 JP) tender offer was expected to start around now. It is delayed because “necessary procedures and actions” under Chinese antitrust and Japan Investment Approval remain incomplete.
- The latter is a trifle concerning, but I expect this gets done. Earnings will be better than originally guided and in the management forecast underpinning the FAs’ valuations.
- HOWEVER, they’d have to be a LOT better to trigger a re-rate. I don’t think they get there but passive is big enough to make traders Oliver Twisty.
[Japan M&A] Hulic Takes Out Riso Kyoiku at ¥295/Share – Small, Unsurprising, Fair Enough, One Quirk.
- Hulic Co Ltd (3003 JP) formed a Business+Capital Alliance with prep/cram/etc school operator Riso Kyoiku (4714 JP) in 2020. They bought 20% by 2021. Then went to 51% in 2024.
- Now they want the rest. This is utterly unsurprising. And will be easy. Nobody else really wants this and Hulic controls it already.
- This is fair enough as a price in my opinion. It is easy, small, illiquid, and roughly meaningless, except for one small quirk.
Z Fin (1168 HK): A High Spread That Reflects Real Vote Risk
- Mr Yaping Ou’s offer for Z Fin (1168 HK) is HK$6.60 and is final. The scheme document is now due on 30 October, and the gross spread is 35%.
- The offer undervalues Z Fin. The ZA Global stake alone is worth about HK$10.2–10.5 per share. That means the offer values the rest of Z Fin at below zero.
- Vote risk and payoff: If minority turnout matches the last AGM, about 5.3m votes against could block the scheme. That’s less than past AGM dissent. The risk/reward is not compelling.
Ardian & Oak Holdings / INWIT: A Towering Question
- Ardian and Oak Holdings, controlling 70.6% of INWIT, are reportedly arranging financing for a take-private. Mubadala could join, but no formal offer has emerged.
- TIM and Fastweb, accounting for 80% of revenues, are challenging their tower contracts. Our DCF yields €6.44/share with contracts preserved and €5.62 risk-weighted.
- At €7.15, a hypothetical €8.50 bid offers 18.9% upside, against 21.4% standalone downside. We would stay on the sidelines pending a formal proposal.
Riso Kyoiku (4714 JP): Weak Process, but Hulic’s JPY295 Offer Will Succeed
- Riso Kyoiku (4714 JP) announced a tender offer from Hulic Co Ltd (3003 JP) at JPY295, a 37.2% premium to the last close of JPY215.
- The offer is light, as it is below Hulic’s 2024 offer and its IFA DCF midpoint. There was also no market check, and the committee’s adviser is a related party.
- However, the offer looks attractive as it is above the target IFA’s DCF midpoint and well above peer multiples. Completion looks likely, as only 22.2% of minorities need to tender.
Hanwha Machinery & Service (0220W0 KS): Kim’s Partial Is Worth A Second Look
- In August this year, Hanwha Corporation (000880 KS) spun off its its distribution, hotel, and food businesses, and robotics and semiconductor equipment businesses, under Hanwha Machinery & Service (0220W0 KS).
- The Kim family firmly controls HMSH via various entities, the largest stake held via Hanwha Energy (23.69%).
- Now Kim Dong-seon (third son of Hanwha Group Chairman Kim Seung-youn) has launched a Tender Offer for 19% in HMSH, elevating his stake to 24.81%. The current spread is attractive.
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